An Agent Beats an Algorithm: Selling to Gen X and Y in 2021

2020 was a resilient year for life insurance.  After a forced pause due to Covid-19 dashing face to face client meetings, the industry adapted to the ‘new normal’ at a distance with impressive results.  Tweaking its approach to client service, generating more robust online applications, and advancing underwriting methods that grew the digital marketplace, life insurance was one of the first affected industries to see a rebound during the course of 2020.  While older age groups diminished in the face of an online marketplace, 30-50-year-olds saw gains as the year progressed, driven in part by their penchant for online applications, underwriting, and processing.  With online sales becoming a necessary norm during the pandemic, where does that leave the life insurance agent in 2021?  Let’s discuss how an agent beats an algorithm in the new year!

Internet-Savvy Age Groups Buoyed the Industry During the Pandemic

According to data presented by Andrea Caruso of MIB Group, the industry saw an uptick in Term, Indexed Life, and Universal Life that was driven primarily by young to middle-aged clients while older client applications fell starkly into the negative as the pandemic persisted.  At the initial height of the pandemic, applications for all types of insurance fell off the map in March and April 2020.  

• Under 45 age group
  • March Applications up a meager 0.3%
  • April Applications down 0.7%
• 45-59 age group
  • March Applications down 4.2%
  • April Applications down 2.4%
• 60 years old+ age group
  • March Applications down 6.2%
  • April Applications down 9.7%

May and June saw a rebound for everyone under 60 years old while the oldest group continued to decline.

• Under 45 age group
  • May Applications up 7.1%
  • June Applications up 3.7%
• 45-59 age group
  • May Applications up 6.9%
  • June Applications up 1.3%
• 60 years old and older  age group
  • May Applications down 1.9%
  • June Applications down 5.5%

The big reveal in these statistics stems from the fact that prior to the height of the pandemic (i.e. in January and February of 2020) the 60+ age group represented a strong driver of application growth at positive 3.4% and 6.4% respectively.  As face-to-face client meetings and introductions became impossible, however, this age group cratered into negative territory while people under the age of 60 showed moderate to substantial growth.  This could be following a trend we were beginning to see before the pandemic started where online purchases are concerned. In 2019,  29% of Americans were purchasing life insurance online and this number was rising year over year as more online options became available.  With the rise of infections and local lockdown orders keeping people at home during the pandemic, the online purchase of life insurance received an artificial, but not necessarily temporary, gain.  Where does that leave the agent?

Human vs Machine: The Future is Now for Life Insurance Agents

While advanced and rapid underwriting techniques transformed the landscape of Term Life insurance, it became possible to purchase and process a Term policy with little to no interaction with an actual agent as far as the consumer was concerned.  Naturally, this cannibalization of service weighs heavy in the Term marketplace.  An algorithm, however, will never be a replacement for an experienced agent looking to grow and retain business.

What it tells us is that the younger generations are looking to do everything online when possible.  Fortunately, online applications and processing are available to consumers while still being associated with an agent.  Essentially, the best of both worlds would be convenience coupled with sound guidance.  Trust Financial offers electronic applications combined with carriers who can provide accelerated underwriting thereby granting the client both the convenience of the digital marketplace and the expertise of a skilled agent to usher them through the process simultaneously.  

It is important to embrace the hybrid approach of superior client service with their need for a paperless process.  While there are Term options out there today that can be completed end to end without human interaction, more complex permanent policies can benefit from the ease of an electronic application that includes agent consultation.  This is evidenced by the fact that in 2020, during the pandemic, the under-60 age groups purchased these policies in exactly this manner.  All Universal Life policies saw growth during the pandemic in the 30 years old and younger crowd, while Variable Universal Life saw growth across all age groups.  

The Clarion Call is Uncompromised Simplicity

Moving forward, the industry has learned a lot from the Covid crisis.  Clients today want uncompromising simplicity.  This means that they want to be able to research, review, and purchase life insurance online without compromising the knowledge and advantages offered by an expert.  When approaching new business, rely on your ability to offer a product that fits the unique needs of the client while also catering to their need to simplify the process.  Trust Financial will give you the tools and resources to fulfill both of these promises.  Enhanced electronic applications aren’t just the future, they have clearly become the present.  As the vaccine rolls out across the nation, the new habits of the consumer are likely to remain.  In order to stay relevant, our approach must complement this brave, new landscape.